Reporting Stockholders’ Equity
Kenny Co. began operations on January 1, 2007, by issuing at $15 per share one half of the 950,000 shares of $1 par value common stock that had been authorized for sale. In addition, Kenny has 500,000 shares of $5 par value, 6% preferred shares authorized. During 2007,Kenny had $1,025,000 of net income and declared $237,500 of dividends.
During 2008,Kenny had the following transactions:
Jan. 10 Issued an additional 100,000 shares of common stock for $17 per share.
Apr. 1 Issued 150,000 shares of the preferred stock for $8 per share.
July 19 Authorized the purchase of a custom made machine to be delivered in January 2009. Kenny restricted $295,000 of retained earnings for the purchase of the machine.
Oct. 23 Sold an additional 50,000 shares of the preferred stock for $9 per share.
Dec. 31 Reported $1,215,000 of net income and declared a dividend of $635,000 to stockholders of record on January 15, 2009, to be paid on February 1, 2009.
1. Prepare the stockholders’ equity section of Kenny’s balance sheet for December 31, 2007.
2. Prepare a statement of changes in stockholders’ equity for 2008.
3. Prepare the stockholders’ equity section of Kenny’s balance sheet for December 31, 2008.